Brexit may have wounded London’s reputation as a leading hub for financial-technology companies, but now an unlikely hero is helping to protect its edge: the UK regulator.

Take SETL, a startup that seeks to harness blockchain technology. The London-based firm says it became the first to use the digital ledger, which is the same architecture bitcoin uses, to process a retail transaction using fiat, government-issued currency. The company’s chief executive officer says the UK regulator helped it sprint ahead.

“London is a financial center for fintech, and regulators get enormous credit for that,” said Peter Randall, CEO at SETL. The company raised US$39.5 million from angel investors after Britain voted to leave the European Union, the biggest UK deal since the referendum, according to trade group Innovate Finance.

Mr Randall said piloting his product would have taken considerably longer without the UK’s so-called sandbox, which is an experimental space for entrepreneurs where some regulations are waived. CEOs can bounce ideas off of officials.

Since 2010, the British government has been trying to encourage new types of finance as traditional banking struggled to recover from the financial crisis. For the sandbox program’s first run, the Financial Conduct Authority picked 24 firms out of 69 applications. The FCA took about four months to select the companies.

“Demand has been significantly higher than expected,” said David Geale, director of policy at the FCA in London.

London needs every advantage it can get. It’s no secret cities like Frankfurt and Amsterdam see June’s referendum as an opportunity to cement their own financial hub status. There are also worries that Brexit will cut off London’s access to top-tier talent from the rest of Europe, and that it could lose access to customers in the single European market.

Adding to London’s woes, venture capitalists have been shy to invest in its fintech sector in the months since the referendum. Funding dropped 26 per cent to US$532 million in the third quarter from a year earlier, according to Innovate Finance. Investors have cancelled or delayed funding for at least 30 British startups since the vote.

That’s where the UK regulator’s plan comes in. While most regulators are mainly known for shutting down risky ventures or doling out fines, lawyers and entrepreneurs say the FCA is much more likely to try to help an enterprise get off the ground.

“I’ve heard clients who have gone to the regulator to talk about their new startups and found the next thing is the FCA saying, ‘That’s interesting, can we talk to you and see you?”‘ said Emily Reid, a partner at law firm Hogan Lovells. “They’re not passively waiting for people to go and see them. They’re quite active.”

Epiphyte is another example. The trade-settlement firm moved from San Francisco to London in large part because of the FCA’s approach. Like SETL, the blockchain firm was part of the first round of companies accepted in the sandbox program.

“We concluded they had a better understanding of how to drive forward innovation than other regulators,” Epiphyte CEO Edan Yago said in London. “Sandbox or no, the regulation in the UK was superior.”

Still, many forces threaten London’s promising technology sector. Mr Yago said some companies have lost investors since Brexit. The UK’s advantage may be eroded as other countries copy its sandbox regulations. Singapore and Australia are working on similar programs.

There’s hope, however, that the regulator will be able to build on its lead.

“The sandbox is a world first,” the FCA’s Mr Geale said. “We are most advanced in terms of being through the process.”